VAT Reverse Charge EU Service Purchases

Article ID: 2025252                      Last updated:  13 April 2021

 

Note:  This support note is for use with AccountEdge 2021 or later.

 

AccountEdge allows you to create a VAT Code Type for businesses required to report Reverse Charge EU Service Purchases.

  • If you have previously setup a Reverse Charge Purchases VAT work-around in an earlier version of AccountEdge, you can now create a dedicated VAT Code for this purpose, allowing easier recording and handling of purchases of services from the EU.

(You should rename and re-number your old work-around 'Reverse Charge VAT For Services' VAT-code to ensure that the old VAT Code is not confused with any new VAT Codes you create)

 

Creating a new 'Reverse Charge EU Service Purchase' VAT Code:

• In AccountEdge, at the top of your screen select Lists> VAT Codes.

• The VAT Code List will appear. Click New.

VAT Code List

• Enter a VAT Code reference, for example 'REV' or similar.

• Enter a Description such as 'Reverse Charge EU Service Purchase' or similar.

• Set the VAT Type to 'Reverse Charge EU Service Purchase'.

• Set the Reported Rate on VAT Return to the standard rate, currently 20%.

• Set the Linked Account for VAT Collected and VAT Paid to your VAT Due liability account (2-xxxx).

Linked Card for VAT Authority is not a mandatory field.

• Click the VAT Return Info button to open the VAT Return Information window.

• You should see that under the Purchases (Input) column, Boxes 1, 4, 6 and 7 are ticked.

Reverse Charge EU Service Purchase

• Click OK to close the VAT Return Information window.

• Click OK to close the VAT Code Information window.

 

(If you previously used a work-around VAT Code for reverse charge EU service purchases, we recommend you edit and rename the old VAT Code and Description to clearly identify it and avoid its use.  For example, change the old VAT Code to REV-OLD or similar, and the Description to Pre-2021 Rev Charge Service Purchase, or similar.)

 

Recording Reverse Charge EU Service Purchases

When recording purchases of services from the EU, simply use the new VAT Code on the relevant lines of your purchases.  These transactions will automatically appear in the VAT Reconciliation window for inclusion in VAT Returns.

 

 

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